Simple Interest Calculator

Calculate Simple Interest or Solve for a Missing Value

Simple Interest Formula

Formula

\[\begin{aligned}I &= P r t \\ A &= P + I \\ P &= \frac{I}{rt} \\ r &= \frac{I}{Pt} \\ t &= \frac{I}{Pr}\end{aligned}\]

Where:

$I$ — simple interest earned or charged ($)
$P$ — principal, or starting amount ($)
$r$ — annual interest rate expressed as a decimal
$t$ — time in years
$A$ — total amount, including principal and interest ($)

Simple interest is calculated only on the original principal, so it grows at a constant rate over time. The calculator rearranges the same formula when you choose to solve for principal, rate, or time.

Simple Interest – Calculation Example

Example: A $1,000 principal earns 6% simple interest per year for 3 years. Find the interest and total amount.

\[I = 1{,}000(0.06)(3) = \$180.00\]

\[A = 1{,}000 + 180 = \$1{,}180.00\]

For comparison, the calculator’s annually compounded amount is $1{,}000(1.06)^3 = \$1{,}191.02$, or $11.02 more.

Result: $180.00 in simple interest and a total amount of $1,180.00.

How to use the calculator

In Solve for, select Interest, Principal, Annual interest rate, or Time. The field for the value being solved is hidden; enter the other three values.
Enter Principal (P) in dollars and Annual interest rate (r) as a percentage where those fields are shown. For example, enter 6 for 6%, not 0.06.
Set Time unit to Years, Months, or Days. Enter the duration in Time (t) if you are not solving for time. If you select Days, also choose a Day-count basis of 365 or 360 days per year.
When solving for principal, rate, or time, enter the target dollar amount in Interest (I). Read the answer under Solved value. When solving for interest, read Simple interest (I) instead.
Check Total amount (A = P + I) for the principal plus simple interest. The results also show an annually compounded comparison and a year-by-year balance table.

What simple interest means

Simple interest is a charge or return calculated on the starting principal throughout the period. It does not add previously earned interest to the amount used for later interest calculations. At a 6% annual rate, a $1,000 principal earns $60 for each full year under this model. Over three years, that is $180 in interest, regardless of how the balance is displayed along the way.

The annual rate and duration work together: doubling either one doubles simple interest if the other inputs stay the same. The rate is entered as a percentage but converted to a decimal for the formula; 6% becomes 0.06. Months are divided by 12 to obtain years. Days are divided by the selected 360- or 365-day basis, which can change the answer for the same number of days.

The Year-by-year balance growth table begins at year zero, shows each complete elapsed year, and adds a final row for a partial year if needed. Its simple balance is the original principal plus accumulated simple interest. The Amount with annual compounding instead uses $P(1+r)^t$: interest is effectively earned on earlier interest. For partial years, this comparison uses a fractional-year exponent. It is a comparison model, not necessarily the method a particular account or contract uses.

Assumptions and practical limits

This calculator assumes a constant annual rate, an unchanged principal, and no deposits, withdrawals, payments, fees, or taxes. The total amount is not a loan repayment schedule or a prediction of an investment’s actual return. For an account that reinvests earnings, use the Compound Interest Calculator; for borrowing with scheduled payments, use the Loan Calculator.

Use the day-count basis specified by your agreement when entering days. The 360-day option treats 360 days as one year; the 365-day option treats 365 days as one year. Neither option automatically counts calendar years, leap days, or dates. If your agreement calculates interest differently, its result may not match this estimate. A product that deducts interest upfront may also need a different approach, such as the Discounted Interest Calculator.

Inputs must produce positive principal, rate, time, and interest. The calculator limits principal to $1 trillion, the annual rate to 100%, time to 100 years, and entered interest to $1 quadrillion. Dollar results are displayed to two decimal places, so small differences may be hidden by rounding.

Frequently Asked Questions

How do I calculate simple interest by hand from a starting and ending balance?

Subtract the starting principal from the ending balance to find the interest: $I=A-P$. To find the annual rate, divide that interest by the principal and the time in years: $r=(A-P)/(Pt)$. For example, if $2,000 becomes $2,120 after two years, the interest is $120 and the annual simple interest rate is 3%.

How long does it take money to double with simple interest?

At a constant simple interest rate, doubling takes $1/r$ years when $r$ is written as a decimal. At 5% annually, that is $1/0.05=20$ years. The Rule of 72 is an approximation for compound interest, not simple interest. This calculation also assumes the principal and rate stay unchanged.

What is a good simple interest rate?

A good rate depends on whether you are earning interest or paying it, as well as the term, risk, fees, and available alternatives. A higher rate benefits a saver but generally costs a borrower more. Compare offers using their full terms and an appropriate measure such as APR for borrowing or APY for savings; the stated simple interest rate alone may not capture the total cost or return.

Is a simple interest rate the same as APR or APY?

No. A simple interest rate describes how interest is calculated on principal. APR is a standardized borrowing-cost measure that may reflect certain fees, depending on the product and applicable rules. APY expresses a savings return that accounts for compounding. Rates with different definitions or compounding schedules are not directly interchangeable, so check an offer’s terms before comparing them.

Does making payments reduce interest on a simple-interest loan?

It can. Many loans described as “simple interest” calculate each period’s interest on the remaining balance, so payments that reduce principal also reduce future interest. This calculator instead assumes the original principal stays unchanged for the entire period. A payment schedule, payment timing, and any fees can therefore make an actual loan’s total interest different from this estimate.

How much difference does a 360-day versus 365-day year make?

For the same number of days, a 360-day basis produces slightly more interest because each day represents a larger fraction of a year. On $10,000 at 8% for 90 days, simple interest is $200.00 using 360 days per year, versus about $197.26 using 365. Use the basis required by your agreement rather than choosing whichever result looks preferable.

Why might my bank or lender calculate a different interest amount?

The agreement may count actual calendar dates, use a different day-count convention, change the rate, or account for payments, deposits, fees, or rounding. Some products also compound interest or deduct a charge upfront. Check the agreement’s calculation method and the dates used before treating a difference as an error; this calculator estimates interest under a fixed-principal, fixed-rate model.